The Verdoorn law at the regional level: Evidence from Europe

Journal title RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO
Author/s Giorgio Fazio, Enza Maltese, Davide Piacentino
Publishing Year 2014 Issue 2014/2
Language Italian Pages 14 P. 34-47 File size 646 KB
DOI 10.3280/REST2014-002002
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

In this paper, we use different methods to estimate the Verdoorn equation with the aim to test for the presence of increasing returns to scale in the manufacturing sector across NUTS-2 European regions during the period 1995-2006. Method and Results We extend the basic Verdoorn equation by considering the spatial dimension both in terms of geographical proximity and hierarchy. Our results corroborate the presence of spatial effects, identify increasing returns to scale at different hierarchical levels and highlight some degree of spatial heterogeneity. Conclusions The analysis underlines the role of space in regional productivity growth processes, both in terms of geographical proximity and hierarchy. The productivity of European regions is characterized by both positive spatial spillovers, possibly due to technological diffusion, and negative spatial spillovers, possibly due to spatial competition effects.

Keywords: Verdoorn law, returns to scale, european regions

Jel codes: C31, O47, R11, R12

  1. Goldstein H. (2003), Multilevel Statistical Models. London: Arnold.
  2. Kaldor N. (1966), Causes of the Slow Rate of Economic Growth in the United Kingdom: An Inaugural Lecture. London: Cambridge University Press.
  3. Angeriz A., McCombie J., Roberts M. (2008), New Estimates of Returns to Scale and Spatial Spillovers for EU Regional Manufacturing, 1986-2002, International Regional Science Review, 31, pp. 62-87.
  4. Cliff A.D., Ord K. (1981), Spatial Processes: Models & Applications. London: Pion.
  5. de Leeuw J., Meijer E. (2008), Handbook of Multilevel Analysis. Berlin: Springer.
  6. Dixon R., Thirlwall A.P. (1975), A Model of Regional Growth Rate Differences on Kaldorian Lines, Oxford Economic Papers, 27: 201-14.
  7. Fingleton B., McCombie J. (1998), Increasing Returns and Economic Growth: Some Evidence for Manufacturing from the European Union Regions, Oxford Economic. Papers, 50, pp. 89-105.
  8. Fingleton B. (2001). Equilibrium and Economic Growth: Spatial Econometric Models and Simulations, Journal of Regional Science, 41, pp. 117-147.
  9. Krugman P., Venables A.J. (1999), The Spatial Economy. Cities, Regions, and International Trade. Cambridge: MIT Press.
  10. LeSage J., Pace R.K (2009), Introduction to Spatial Econometrics. Boca Raton:
  11. Chapman & Hall/CRC. McCombie J. (1982), Economic Growth, Kaldor’s Laws and the Static-dynamic Verdoorn Law Paradox, Applied Economics, 14, pp. 279-294.
  12. McCombie J., Roberts M. (2007), Returns to Scale and Regional Growth: The Static-dynamic Verdoorn Law Paradox Revisited, Journal of Regional Science, 47, pp. 179-208.
  13. Pieper U. (2003), Sectoral Regularities of Productivity Growth in Developing Countries. A Kaldorian Interpretation, Cambridge Journal of Economics, 27, pp. 831-850.
  14. Pons-Novell J., Viledecans-Marsal E. (1999), Kaldor’s Laws and Spatial Dependence: Evidence for the European Regions, Regional Studies, 33, pp. 443-451.
  15. Rasbash J., Charlton C., Browne W.J., Healy M., Cameron B. (2009a), MLwiN Version 2.1, Centre for Multilevel Modelling, University of Bristol.
  16. Rasbash J., Charlton C., Browne W.J., Healy M., Cameron B. (2009b), A User’s Guide to MLWin 2.1, Centre for Multilevel Modelling, University of Bristol.
  17. Rowthorn R.E (1979), A Note on Verdoorn’s Law, Economic Journal, 89, pp. 131-133.
  18. Thirlwall A.P. (1980), Rowthorn’s Interpretation of Verdoorn’s Law, Economic Journal, 90, pp. 386-388.
  19. Verdoorn P.J. (1949), Fattori che regolano lo sviluppo della produttività del lavoro, L’industria, 1, pp. 3-10.
  20. Young A. (1928), Increasing Returns and Economic Progress, Economic Journal, 38, pp. 527-542.

Giorgio Fazio, Enza Maltese, Davide Piacentino, The verdoorn law at the regional level: evidence from europe in "RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO" 2/2014, pp 34-47, DOI: 10.3280/REST2014-002002